Unemployment insurance becomes more expensive and harder to get

Several news stories have appeared which suggest insurers are tightening up on who they accept, and the price of new and renewal business.

Naturally, insurers are not keen on publicising this type of information that puts them in a not too good light – the moment you need the cover is when some insurers make it harder and more expensive to get.

Although some news stories mention names, the information is not always complete. For example, an individual insurer will often differ in the price and acceptance between new and renewal business, and whether the customer comes direct, via a certain bank or building society, via a comparison site, or via a certain insurance broker.

The general view is that new and renewal prices, where they are going up, are increasing by about 20%.

Acceptance of new business depends what industry and what company you work for. Insurers do read the news so this can change daily. Many are nervous of accepting anyone in financial services or property.

At least one company only accepts customers who have applied within 30 days of taking out a mortgage or remortgage and turns down those with existing home loans.

Initial exclusion periods, or the time in which a claim cannot be made on a policy, are doubling from 90 days to 180.

Not everyone believes the insurers are right. Vera Cottrell of Which? says, “You have to ask why the premiums are rising now. Historically, the claims ratio on loans PPI has been low – about 15 per cent – so this has been a very profitable line. The minute people start making claims, they increase premiums, which begs the question, ‘why are they raising them now?’”

Anyone facing higher renewal premiums should think carefully before cancelling their cover. Policyholders whose health has deteriorated since taking out insurance could be declined new cover due to pre-existing conditions. Also, if a person’s employment sector has seen large job losses, insurers may consider the individual too much of a risk.

But not all insurers are acting the same way, so it is increasingly important to get several quotes.